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Finance Calc Kit
Investments

PVGO Calculator

Calculate PVGO (Present Value of Growth Opportunities), zero-growth stock price, and growth component percentage of share value.

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Market stock price

$50.00

No-growth value (EPS / r)

$40.00

PVGO

$10.00

PVGO share of price

20.00%

Stock value composition

Stock price$50.00
  • No-growth value (EPS / r)$40.0080.0%
  • PVGO (growth opportunities)$10.0020.0%
Report tool

What is PVGO (present value of growth opportunities)?

PVGO measures how much of a stock's price comes from expected future growth rather than current earnings capitalized at a no-growth rate. High-growth companies often trade with a large PVGO component, while mature firms may derive most of their value from existing earnings power.

Compare PVGO with the dividend discount model calculator for dividend-based intrinsic value, or check how much investors pay per dollar of earnings with the price-to-earnings calculator.

Direct PVGO decomposition

Split market price into a no-growth base and the growth premium:

No-Growth Value=EPSr\text{No-Growth Value} = \frac{\text{EPS}}{r}
PVGO=Stock Price−No-Growth Value\text{PVGO} = \text{Stock Price} - \text{No-Growth Value}

Fundamental mode with retention and ROE

Sustainable growth links retention to ROE. The Gordon-style earnings model gives a fundamental price before PVGO is extracted:

g=b×ROEg = b \times ROE
Price=EPS×(1−b)r−g\text{Price} = \frac{\text{EPS} \times (1 - b)}{r - g}

Worked example: $50 price, $4 EPS, 10% required return

In direct mode, capitalize EPS at the required return and subtract from market price:

No-Growth Value=40.10=40\text{No-Growth Value} = \frac{4}{0.10} = 40
PVGO=50−40=10\text{PVGO} = 50 - 40 = 10

PVGO is $10, or 20% of the $50 stock price. The donut chart shows how much value investors assign to growth opportunities versus current earnings power.

Frequently asked questions

Can PVGO be negative?
Yes. If the market price is below the no-growth value EPS/r, PVGO is negative, which can happen when investors expect declining earnings or apply a higher risk premium than your required return.
What required return should I use?
Use your cost of equity or the discount rate that matches your valuation framework. Higher required returns reduce the no-growth base and change the PVGO split.
How is fundamental mode different from direct mode?
Direct mode uses the observed market price. Fundamental mode first estimates price from retention, ROE, and EPS growth, then decomposes that value into no-growth and PVGO parts.
Does PVGO equal future project NPV?
Conceptually, PVGO captures the value of growth investments beyond a no-growth baseline. In practice it is a market-implied summary rather than a project-by-project NPV schedule.

Resources and references

The formulas and methods in this calculator were checked against these independent sources.